What are the implications of the rise in prices last month?

So, inflation is still on the rise. The government’s target measure of CPI rose from 3.0% in February to 3.4% in March. This was mainly due to the cost of gas and petrol prices and a spike in food prices. A weak level of sterling is coupling with very high prices for oil and other commodities, and on top of … Continue reading

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Rapid rise in UK inflation

The Consumer Prices Index (CPI) rose to 3.5% in January from 2.9% in December. According to the Office of National Statistics (ONS) this is the second largest ever increase in the annual inflation rate between two months. It follows on from the record increase of 1.0% in the annual inflation rate between November and December. The reason for the increase … Continue reading

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2009: A Review of the Economic Year

This is the title of a talk given by Spencer Dale, Chief Economist at the Bank of England yesterday in which he discusses the policy response to the economic downturn, evidence that the economy has stabilised, and the prospects for 2010 and beyond. In it he notes that the MPC’s interest rate decisions have acted to improve companies’ cash flow … Continue reading

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MPC in 3-way split over Quantitative Easing

Minutes of the last meeting of the Monetary Policy Committee (MPC) of the Bank of England have just been published, and show that seven of the nine members agreed that an extra £25bn should be pumped into the economy through the programme of asset purchasing or quantitative easing. This was enough to secure agreement to raise the total spend to … Continue reading

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Quantitative easing to expand by £25bn

The Bank of England’s Monetary Policy Committee has just confirmed that Bank Rate will remain at 0.5%, as it has since early March this year. However, the MPC decided to extend its asset purchase programme to the tune of an additional £25bn, to reach a total of £200bn.   The Committee set the scene by noting that output has fallen … Continue reading

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Inflation higher than expected, but is it good news?

The consumer price index (CPI) for July was 1.8%, which was exactly the same as it was in June, and remained within the government’s 2% target. The CPI saw some downward pressure on prices from food, soft drinks, restaurants and hotels but these offset by rises in the prices of games, toys, hobbies and recorded media such as DVDs and … Continue reading

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The economy is either getting better or getting worse

In my blog yesterday I listed some of the positive signs that the economy was showing in terms of house prices, house building and the service sector. Then later in the day the Monetary Policy Committee (MPC) announced that the UK recession “appears to have been deeper than previously thought.”   Not only that, but the MPC thought it necessary … Continue reading

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Inflation Targeting: Learning the lessons from the financial crisis

On Tuesday of this week, Spencer Dale, Executive Director and Chief Economist at the Bank of England, used the above title as his talk to the Society of Business Economists, and I will try to summarise his main themes.   He noted that the sudden end to a long period of economic stability has led to the inflation targeting framework … Continue reading

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£50bn extra on offer from the Bank of England

Yesterday the Bank of England’s Monetary Policy Committee (MPC) decided to keep the official bank rate at 0.5% but also to extend its programme of asset purchases financed by issuing central bank reserves. This process is generally known as “quantitative easing”. They have decided to increase the size of this fund by £50bn to a total of £125bn.   The … Continue reading

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It’s getting scary out there

So, interest rates are down to 0.5% and the Bank of England is given permission to begin “quantitative easing”. It is now considered nostalgic to look back to the balmy days of last summer and autumn (okay, so it rained most of the time) when interest rates were at 5% and we were all raising our eyebrows at the way … Continue reading

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